apog-20240601

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 1, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-6365

_________________________________

APOGEE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

_________________________________

Minnesota

41-0919654

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

4400 West 78th Street, Suite 520

Minneapolis

Minnesota

55435

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (952) 835-1874

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.33 1/3 per share

APOG

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

As of July 5, 2024, 21,933,163 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES


		Page
PART I	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets	4

	Consolidated Results of Operations	5

	Consolidated Statements of Comprehensive Earnings	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Shareholders' Equity	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART II	Other Information

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 5.	Other Information	26

Item 6.	Exhibits	26

Signatures		27

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PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(In thousands, except stock data)	June 1, 2024		March 2, 2024
Assets
Current assets
Cash and cash equivalents	$	30,363	$	37,216

Receivables, net	183,270		173,557
Inventories, net	80,495		69,240
Contract assets	43,957		49,502
Other current assets	34,417		29,124
Total current assets	372,502		358,639
Property, plant and equipment, net of accumulated depreciation of $452,711 and $445,017	242,292		244,216
Operating lease right-of-use assets	38,726		40,221
Goodwill	129,042		129,182
Intangible assets, net	64,981		66,114
Other non-current assets	41,436		45,692
Total assets	$	888,979	$	884,064
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	82,841	$	84,755
Accrued compensation and benefits	28,900		53,801

Contract liabilities	36,377		34,755
Operating lease liabilities	12,090		12,286

Other current liabilities	66,895		59,108
Total current liabilities	227,103		244,705
Long-term debt	77,000		62,000
Non-current operating lease liabilities	30,462		31,907
Non-current self-insurance reserves	30,859		30,552
Other non-current liabilities	43,600		43,875
Commitments and contingent liabilities (Note 6)
Shareholders’ equity
Junior preferred stock of $1.00 par value; authorized 200,000 shares; zero issued and outstanding	—		—
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 21,936,674 and 22,089,265, respectively	7,312		7,363
Additional paid-in capital	153,002		152,818
Retained earnings	348,651		340,375


Accumulated other comprehensive loss	(29,010)		(29,531)
Total shareholders’ equity	479,955		471,025
Total liabilities and shareholders’ equity	$	888,979	$	884,064

See accompanying notes to consolidated financial statements.

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CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)


	Three Months Ended
(In thousands, except per share data)		June 1, 2024		May 27, 2023
Net sales		$	331,516	$	361,713
Cost of sales		232,661		268,727
Gross profit		98,855		92,986
Selling, general and administrative expenses		57,474		59,219
Operating income		41,381		33,767
Interest expense, net		450		2,036

Other (income) expense, net		(143)		288
Earnings before income taxes		41,074		31,443
Income tax expense		10,063		7,867
Net earnings		$	31,011	$	23,576
Basic earnings per share		$	1.42	$	1.08
Diluted earnings per share		$	1.41	$	1.05
Weighted average basic shares outstanding		21,823		21,883
Weighted average diluted shares outstanding		22,061		22,386

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Unaudited)


	Three Months Ended
(In thousands)		June 1, 2024		May 27, 2023
Net earnings		$	31,011	$	23,576
Other comprehensive earnings:
Unrealized (loss) gain on marketable securities, net of $(1) and $33 of tax (benefit) expense, respectively		(6)		121
Unrealized gain (loss) on derivative instruments, net of $364 and $(121) of tax expense (benefit), respectively		1,196		(397)
Foreign currency translation adjustments		(669)		435
Other comprehensive earnings		521		159
Total comprehensive earnings		$	31,532	$	23,735

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended
(In thousands)	June 1, 2024		May 27, 2023
Operating Activities
Net earnings	$	31,011	$	23,576
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	9,976		10,282
Share-based compensation	2,704		2,178
Deferred income taxes	3,466		(165)

Loss (gain) on disposal of property, plant and equipment	22		(27)



Non-cash lease expense	2,895		2,714
Other, net	(925)		(432)
Changes in operating assets and liabilities:
Receivables	(9,845)		(13,476)
Inventories	(11,337)		(2,068)
Contract assets	5,511		14,368
Accounts payable	(1,871)		(8,390)

Accrued compensation and benefits	(24,850)		(13,312)
Contract liabilities	1,648		8,158
Operating lease liability	(3,007)		(3,101)
Accrued income taxes	6,535		7,590
Other current assets and liabilities	(6,480)		(6,608)
Net cash provided by operating activities	5,453		21,287
Investing Activities
Capital expenditures	(7,229)		(7,398)
Proceeds from sales of property, plant and equipment	40		66
Purchases of marketable securities	(740)		—
Sales/maturities of marketable securities	600		400

Net cash used by investing activities	(7,329)		(6,932)
Financing Activities
Proceeds from revolving credit facilities	30,000		105,852

Repayments on revolving credit facilities	(15,000)		(105,000)


Repurchase of common stock	(15,061)		(5,193)
Dividends paid	—		(5,245)

Other, net	(4,865)		(1,677)
Net cash used by financing activities	(4,926)		(11,263)
Effect of exchange rates on cash	(51)		77
(Decrease) increase in cash and cash equivalents	(6,853)		3,169
Cash and cash equivalents at beginning of period	37,216		21,473
Cash and cash equivalents at end of period	$	30,363	$	24,642
Non-cash Activity
Capital expenditures in accounts payable	$	472	$	2,115
Dividends declared but not yet paid	$	5,409	$	—

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


(In thousands)	Common Shares Outstanding	Common Stock at Par Value		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity
Balance at March 2, 2024	22,089	$	7,363	$	152,818	$	340,375	$	(29,531)	$	471,025
Net earnings	—	—		—		31,011		—		31,011
Other comprehensive income, net of tax	—	—		—		—		521		521
Issuance of stock, net of cancellations	170	57		(57)		—		—		—
Share-based compensation	—	—		2,704		—		—		2,704

Share repurchases	(242)	(81)		(1,860)		(13,120)		—		(15,061)
Other share retirements	(80)	(27)		(603)		(4,206)		—		(4,836)
Declared dividends	—	—		—		(5,409)		—		(5,409)
Balance at June 1, 2024	21,937	$	7,312	$	153,002	$	348,651	$	(29,010)	$	479,955


(In thousands)	Common Shares Outstanding	Common Stock at Par Value		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity
Balance at February 25, 2023	22,224	$	7,408	$	146,816	$	273,740	$	(31,556)	$	396,408
Net earnings	—	—		—		23,576		—		23,576
Other comprehensive income, net of tax	—	—		—		—		159		159
Issuance of stock, net of cancellations	155	52		13		(9)		—		56
Share-based compensation	—	—		2,178		—		—		2,178

Share repurchases	(120)	(40)		(829)		(4,324)		—		(5,193)
Other share retirements	(40)	(14)		(281)		(1,438)		—		(1,733)
Cash dividends	—	—		—		(5,245)		—		(5,245)
Balance at May 27, 2023	22,219	$	7,406	$	147,897	$	286,300	$	(31,397)	$	410,206

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of presentation

The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended March 2, 2024. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three-month period ended June 1, 2024 are not necessarily indicative of the results to be expected for the full year.

New accounting standards

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which expands the required disclosure for reportable segments. This guidance requires entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all segment disclosures which are currently required annually. This ASU additionally requires entities to disclose the title and position of the individual or the name of the group or committee identified as its chief operating decision-maker. Such guidance, which is required to be applied retrospectively, is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, although early adoption is permitted. While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact to our segment disclosures for the year ended March 1, 2025 and future interim periods.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, intended to enhance the transparency and decision-usefulness of income tax disclosures. Such guidance requires entities to provide additional information within their income tax rate reconciliation, including further disclosure of federal, state, and foreign income taxes and to provide more details about these reconciling items if a quantitative threshold is met. This guidance additionally requires expanded disclosure of income taxes paid, including amounts paid for federal, state, and foreign taxes. This ASU, which is required to be applied prospectively, is effective for fiscal years beginning after December 15, 2024, although early adoption and retrospective application is permitted. While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact on our income tax disclosures, including the processes and controls around the collection of this information.

2.Revenue, Receivables and Contract Assets and Liabilities

Revenue

The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):


	Three Months Ended
(In thousands)		June 1, 2024		May 27, 2023
Recognized at shipment		$	136,722	$	152,655
Recognized over time (input method)		116,681		123,381
Recognized over time (output method)		78,113		85,677
Total		$	331,516	$	361,713

Receivables

Receivables reflected in the financial statements represent the net amount expected to be collected. An allowance for credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecasted economic conditions and other relevant factors. Upon billing, aging of receivables is monitored until collection. An account is considered current when it is within agreed upon payment terms. An account is written off when it is determined that the asset is no longer collectible.

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(In thousands)	June 1, 2024		March 2, 2024
Trade accounts	$	112,266	$	115,061
Construction contracts	73,720		61,879
Total receivables	185,986		176,940
Less: allowance for credit losses	2,716		3,383
Receivables, net	$	183,270	$	173,557

The following table summarizes the activity in the allowance for credit losses for the three-month period ended:


(In thousands)	June 1, 2024
Beginning balance	$	3,383
Reductions to allowance of credit losses	(659)

Foreign currency effects	(8)
Ending balance	$	2,716

Contract assets and liabilities

Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released to us from the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts.

The time period between when performance obligations are complete and payment is due is not significant. In certain parts of our business that recognize revenue over time, progress billings follow an agreed-upon schedule of values.

The changes in contract assets and contract liabilities were mainly due to timing of project activity within our businesses that operate under long-term contracts.


Other contract-related disclosures	Three Months Ended
(In thousands)		June 1, 2024		May 27, 2023
Revenue recognized related to contract liabilities from prior year-end		$	26,530	$	22,745
Revenue recognized related to prior satisfaction of performance obligations		3,298		427

Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that time frame. Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time. The transaction prices associated with unsatisfied performance obligations at June 1, 2024 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:


(In thousands)	June 1, 2024
Within one year	$	608,606
Between one and two years	352,707
Beyond two years	109,831
Total	$	1,071,144

3.Inventories

Inventories


(In thousands)	June 1, 2024		March 2, 2024
Raw materials	$	33,970	$	31,363
Work-in-process	16,605		12,291
Finished goods	29,920		25,586
Total inventories, net	$	80,495	$	69,240

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4.Financial Instruments

Marketable securities

Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), we hold the following available-for-sale marketable securities, made up of fixed-maturity investments:


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 1, 2024	$	11,455	$	19	$	448	$	11,026
March 2, 2024	11,327		15		437		10,905

Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements. The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

The amortized cost and estimated fair values of these investments at June 1, 2024, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.


(In thousands)	Amortized Cost		Estimated Fair Value
Due within one year	$	3,625	$	3,608
Due after one year through five years	7,830		7,418



Total	$	11,455	$	11,026

Derivative instruments

We use interest rate swaps, currency put options, and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.

In fiscal 2020, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility. As of June 1, 2024, the interest rate swap contract had a notional value of $30.0 million and has a maturity date of February 5, 2026.

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign exchange rates. These contracts generally have an original maturity date of less than one year. As of June 1, 2024, we held aluminum purchase contracts and foreign exchange option contracts with U.S. dollar notional values of $4.7 million and $0.7 million, respectively.

The mark to market adjustments on these derivative instruments are recorded within our consolidated balance sheets within other current assets and other current liabilities. Gains or losses associated with these instruments are recorded as a component of accumulated other comprehensive loss until which time the hedged transaction is settled and gains or losses are reclassified to net earnings.

Fair value measurements

Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities.

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(In thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value
June 1, 2024
Assets:
Money market funds	$	23,874	$	—	$	23,874

Municipal and corporate bonds	—		11,026		11,026


Interest rate swap contract	—		1,336		1,336
Aluminum hedging contract	—		386		386





March 2, 2024
Assets:
Money market funds	$	26,529	$	—	$	26,529

Municipal and corporate bonds	—		10,905		10,905
Foreign currency forward/option contract	—		3		3
Interest rate swap contract	—		1,292		1,292

Liabilities:

Aluminum hedging contract	—		529		529

5.Debt

As of June 1, 2024, we had a committed revolving credit facility with Wells Fargo Bank, N.A. as administrative agent, and other lenders (U.S. credit facility) with maximum borrowings of up to $385 million and a maturity date of August 5, 2027. Outstanding borrowings under the revolving credit facility were $65.0 million and $50.0 million as of June 1, 2024 and March 2, 2024, respectively.

We also maintain two Canadian committed, revolving credit facilities with the Bank of Montreal totaling $25.0 million USD (Canadian facilities). The Canadian facilities expire annually in February, but can be renewed each year solely at our discretion until August 2027. Therefore, we have classified all outstanding amounts under these facilities as long-term debt within our consolidated balance sheets. As of June 1, 2024 and March 2, 2024, we had no outstanding borrowings under these Canadian facilities.

Our revolving credit facilities contain two maintenance financial covenants that require us to stay below a maximum debt-to-EBITDA ratio of 3.25 and maintain a minimum ratio of EBITDA-to-interest expense of 3.00. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At June 1, 2024, we were in compliance with both financial covenants.

The revolving credit facilities also contain an acquisition holiday. In the event we make an acquisition for which the purchase price is greater than $75 million, we can elect to increase the maximum debt-to-EBITDA ratio to 3.75 for a period of four consecutive fiscal quarters, commencing with the fiscal quarter in which a qualifying acquisition occurs. No more than two acquisition "holidays" can occur during the term of the facility, and at least two fiscal quarters must separate qualifying acquisitions.

Borrowings under the credit facilities bear floating interest at either the Base Rate or Term Secured Overnight Financing Rate (SOFR), or, in the case of the Canadian facilities, Canadian Overnight Repo Rate Average (CORRA) plus, in each a margin based on the Leverage Ratio (as defined in the Credit Agreements). For Base Rate borrowings, the margin ranges from 0.125% to 0.75%. For Term SOFR and CORRA borrowings, the margin ranges from 1.125% to 1.75%, with an incremental Term SOFR and CORRA adjustment of 0.10% and 0.29547%, respectively.

The U.S. credit facility also contains an "accordion" provision. Under this provision, we can request that the facility be increased by as much as $200.0 million. Any lender may elect or decline to participate in the requested increase at their sole discretion.

At June 1, 2024, we had a total of $15.0 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2026 through 2032 and reduce borrowing capacity under the revolving credit facility. As of June 1, 2024, the amount available for revolving borrowings was $305.0 million and $25.0 million under the U.S. credit facility and Canadian facilities, respectively.

At June 1, 2024, debt included $12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043.

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The fair value of our U.S. credit facility, Canadian credit facilities and industrial revenue bonds approximated carrying values at June 1, 2024, and would be classified as Level 2 within the fair value hierarchy described in Note 4, due to the variable interest rates on these instruments.


(In thousands)	June 1, 2024		May 27, 2023
Interest on debt	$	1,174	$	2,510
Interest rate swap gain	(236)		(267)
Other interest expense	21		28
Interest income	$	(509)	$	(235)
Interest expense, net	$	450	$	2,036

Interest payments under the U.S. and Canadian credit facilities were $1.1 million and $2.4 million for the three months ended June 1, 2024 and May 27, 2023, respectively.

6.Commitments and Contingent Liabilities

Bond commitments

In the ordinary course of business, predominantly in our Architectural Services and Architectural Framing Systems Segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance. At June 1, 2024, $1.3 billion of these types of bonds were outstanding, of which $434.7 million is in our backlog. These bonds have expiration dates that align with completion of the sales order or contract. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

Warranty and project-related contingencies

We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on these accruals in any given period include the following: changes in manufacturing quality, changes in product mix, and any significant changes in sales volume.


	Three Months Ended
(In thousands)	June 1, 2024
Balance at beginning of period	$	21,362
Additional accruals	2,399

Claims paid	(3,529)
Balance at end of period	$	20,232

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services Segment and in certain parts of our Architectural Framing Systems Segment. We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages.

Letters of credit

At June 1, 2024, we had $15.0 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 5.

Purchase obligations

Purchase obligations for raw material commitments and capital expenditures totaled $17.9 million as of June 1, 2024.

New Markets Tax Credit (NMTC) transactions

We have two outstanding NMTC arrangements which help to support operational expansion. Proceeds received from investors on these transactions are included within other non-current liabilities in our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits. The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other non-current assets in our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase or for working capital purposes for each

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project, we are required to hold cash dedicated to fund each project, which is classified as restricted cash in our consolidated balance sheets. As a result of the structure of these transactions, variable-interest entities were created. As the other investors in these programs do not have a material interest in the entities' underlying economics, we include 100% of the results of the variable-interest entities in our consolidated financial statements.

The table below provides a summary of estimated benefits related to our outstanding NMTC transactions (in thousands):


Inception date	Termination date	Deferred Benefit		Deferred costs		Net benefit
May 2022(1)	August 2025	$	6,052	$	1,604	$	4,448
September 2018	September 2025	$	3,198	$	1,031	$	2,167
Total		$	9,250	$	2,635	$	6,615

(1) Continuation of the August 2018 NMTC financing transaction

Litigation

The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. In December 2022, the claimant in an arbitration of one such claim was awarded $20 million. The Company has appealed the award and believes, after taking into account all currently available information, including the advice of counsel and the likelihood of available insurance coverage, that this award will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

7.Supplier Finance Program Obligations

In the first quarter of fiscal 2024, we implemented a supplier financing arrangement that enables our suppliers, at their sole discretion, to sell our receivables (i.e., our payment obligations to the suppliers) on a non-recourse basis in order to be paid earlier than our payment terms provide. Our suppliers’ voluntary inclusion of invoices in the supplier financing arrangement has no bearing on our payment terms, the amounts we pay, or our liquidity. We have no economic interest in a supplier’s decision to participate in the supplier financing program, and we do not provide any guarantees in connection with it. These balances are reflected in accounts payable in the consolidated balance sheets and are reflected in net cash provided by operating activities in our consolidated statements of cash flows when settled.

The following table summarizes the obligation activity and outstanding balances as of June 1, 2024 and March 2, 2024 that we have confirmed as valid to the administrators of our program:


(In thousands)	June 1, 2024		March 2, 2024
Balance at beginning of period	$	6,527	$	—
Obligations added to the program	10,342		33,133
Obligations settled	(10,666)		(26,606)
Balance at end of period	$	6,203	$	6,527

8.Shareholders' Equity

We declared dividends totaling $5.4 million ($0.25 per share) in the first three months of fiscal 2025, compared to dividends paid of $5.2 million ($0.24 per share) in the comparable prior year period.

During fiscal 2004, the Board of Directors authorized a share repurchase program allowing us to repurchase shares of our outstanding common stock, with subsequent increases in authorization. During the three-months ended June 1, 2024, we repurchased 241,573 shares under the program, for a total cost of $15.1 million, inclusive of the applicable excise tax. During the three-months ended May 27, 2023, we repurchased 119,916 shares under the program, for a total cost of $5.2 million. We have repurchased a total of 11,518,090 shares, at a total cost of $408.5 million, since the inception of this program in fiscal 2004. We have remaining authority to repurchase 2,731,910 shares under this program, which has no expiration date. We may also elect to repurchase additional shares of common stock under our authorization, subject to limitations contained in our debt

SEC Form 10-Q filed by Apogee Enterprises Inc.